Hillshire Brands is buying Pinnacle Foods, whose brands include Duncan Hines, Bird’s Eye, Hungry Man and Aunt Jemima, in a cash-and-stock deal valued at approximately $4.23 billion.
The deal would expand Hillshire Brands’ portfolio, which includes Jimmy Dean sausage, Ball Park franks and Sara Lee frozen bakery goods.
Shares of both companies rose in premarket trading on word of the deal on Monday.
“The new Hillshire Brands will have a strengthened position in frozen foods, new opportunities in the center store for our brands and in refrigerated for Pinnacle Foods’ brands,” Hillshire President and CEO Sean Connolly said in a statement.
The combined company, which is expected to have annual revenue of approximately $6.6 billion, will use the Hillshire Brands name and be based in Chicago. Connolly will serve as its president and CEO.
Each share of Parsippany, New Jersey-based Pinnacle Foods common stock will be exchanged for $18 in cash and 0.50 shares of Hillshire Brands Co. common stock. The companies said Monday that the implied purchase price is $36.02 per share.
That’s an 18 percent premium to Pinnacle’s Friday closing price of $30.45. Pinnacle went public in March 2013.
The companies put the deal’s total value at about $6.6 billion, which includes Pinnacle’s outstanding debt.